Quantifying your value proposition – making the business case

Quantifying your value proposition requires creating and communicating a clear, compelling picture of how your solution will drive your customer’s business results - allowing sales reps to make their business case. It requires translating the benefits of your solution into high impact, measurable outcomes that matter to the customer. When done effectively, it enables you to maximize the competitive advantages that differentiate you from your competitors.

Quantifying a value proposition involves three steps:

  • First, list the business outcomes your solution impacts (e.g., improvement in the percentage of just-in-time deliveries).
  • Second, select a customer metric that will demonstrate the impact of the business outcome (e.g., reduction in inventory x annual inventory carrying costs = value of just-in-time deliveries).
  • Third, determine the most compelling anchor for bring the metric to life (e.g., compare the outcome of your solution against the status quo or compare it against your estimate of the competitor’s solution or against other companies in the customer’s market space).

What are some best practices for quantifying value? Having a simple and straightforward planning process for the quantifying value is one piece of the puzzle. As is often the case; however, the real difficulty and creativity lie in the execution. Hence it is useful to explore four best practices for quantifying and selling value.

1. Sell the Concept First. Top performers do a superior job quantifying their value proposition but they don’t just “sell by the numbers.” Even a great set of numbers will fall on deaf ears if you have not established a foundational level of understanding of your solution and a high level of trust. Worst possibility? The quantitative analysis is viewed as a selling ploy and therefore discounted accordingly.

2. Remember the Ripple Effect. Often in addition to the primary impact of your solution, there are, as well, secondary and tertiary positive outcomes. The other benefits might occur in another division, in a different time frame or for an alternative set of players inside the organization. Make sure you have uncovered and demonstrated the payoffs of the Ripple Effect.

3. Translate Soft Differentiators. If your only major competitive advantage is price, the challenge of quantifying your value proposition is simple and straightforward. On the other hand, if you have other competitive advantages – such as integrity, superior integration, and creativity – the challenge exists to translate those soft differentiators. It is easy to quantify that part of your value proposition that is easily measurable, like price. However it is equally important, although much harder, to generate quantifiable proxies for soft differentiators.

Soft differentiators tend to fall into two categories: Value Adds and Strategic Opportunities. Value Adds focus on improvements to the quality of the business operations. Examples of intangible benefits include:

  • Providing better information and/or more timely information
  • Improving customer good will
  • Improving service image
  • Identifying problems on a timelier basis

Strategic Opportunities are those intangible benefits that help the customer expand its business. They might include:

  • Protecting a company’s competitive position
  • Increasing market share
  • Venturing into new markets

4. Tell the Integration Story. Many companies have created integrated solutions. However, they continue to sell the individual pieces – hence there is a huge opportunity for differentiation for those that get it right. One solution? Help the customer connect the dots and understand the power of an integrated solution by displaying a unique set of numbers that tell the story.

Check out other posts on sales effectiveness at the Sales Training Connection. 

©2011 Sales Horizons™, LLC

Technorati Tags: , , , , , , , , , ,

About Richard Ruff

For more than 30 years Dr. Richard Ruff and Dr. Janet Spirer - the founders of Sales Horizons - have worked with the Fortune 1000 - such as UPS, Canon USA, Smith & Nephew, Boston Scientific, Owens & Minor, Textron - to design and develop sales training programs. During his career Dick has authored numerous articles related to sales effectiveness and co-authored "Managing Major Sales", a book about sales management, "Parlez-Vous Business" which helps sales people integrate the language of business into the sales process, and "Getting Partnering Right" – a research based work on the best practices for forming strategic selling alliances. Dr. Ruff received his Ph.D. in Organizational Psychology from the University of Tennessee and a B.S. from Rennsselaer Polytechnic Institute.
This entry was posted in Business Acumen, General Posts, Sales Best Practices, Sales Call Execution, Sales Negotiation, Sales Strategy, Sales Training, Selling Value and tagged , , , , , , , , , , . Bookmark the permalink.

2 Responses to Quantifying your value proposition – making the business case

  1. Pingback: Medical devices – creating value propositions | Sales Training Connection

  2. Pingback: Four more tips for selling value – from Inc. Magazine | Sales Training Connection

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>